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Watchdog tips big power savings for households

Business

Households should benefit from significant falls in electricity costs this year despite a major spike in usage caused by lockdowns and pandemic restrictions, according to the Australian Competition and Consumer Commission.

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The ACCC’s latest report found that the average wholesale spot price, which is the price retailers pay day-to-day for uncontracted electricity, fell by 50 per cent between mid-2019 and early 2021.

ACCC chair Rod Simms said he expected 2021 to be a better year for households and small businesses as large reductions in the wholesale cost of electricity continued to flow through to people’s bills.

The ACCC report found that solar power customers had seen the biggest benefit.

In 2020, prices paid by solar residential customers were 29 per cent lower than those paid by non-solar residential customers, after accounting for any feed-in tariffs. The average household with solar paid $94 less on their quarterly bill, despite using more energy from the grid.

Prices paid by solar small business customers were 31 per cent less than non-solar small businesses.

Solar customers on premium feed-in tariffs, which are the legacy subsidised rates that were set at much higher levels, had median annual rebates of $858 for residential and $1993 for small business.

“Solar installation in homes and small businesses has been one of the biggest changes in the electricity sector over the last decade,” Sims said.

“The early solar adopters who are receiving premium feed-in tariffs are getting great deals, but we remain concerned that these rates are being subsidised by non-solar customers.”

It also found that COVID-19 restrictions had a significant impact on electricity bills, with households using 10 per cent more electricity as people spent more time at home, and small businesses using 17 per cent less due to reduced onsite business activity.

The ACCC found there were still major savings available for customers. An analysis revealed that if all customers in eastern and southern National Electricity Market states were to switch to the cheaper deals that are available, or benefit from retailers lowering the prices of their existing plans, the annual savings would be about $900 million compared to June 2020.

“The ACCC is currently investigating a number of electricity retailers’ prices to see if recent wholesale price reductions are being passed on to consumers, as required by law,” Sims said.

The report shows that seven per cent of residential customers were still on more expensive standing offers in 2020, but more and more households have shifted to cheaper market offers in recent years.

The median price under a residential standing offer was 18 per cent more expensive than the market offer. A typical household still on a standing offer could save almost $200 per year by switching to a median market offer.

“We are concerned about the high number of small businesses that are still on more expensive standing offers,” Sims said.

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